Greg Koch

Craft Brewing’s Growing Pains

In the last couple of months, MarketWatch.com’s Jason Notte has seen disquieting trends in the craft beer industry:

  • Craft Brew Alliance’s Redhook brand announced layoffs at its Woodinville, Washington, brewery. The Woodinville plant is contract-brewing for Pabst Brewing Company, but the Pabst business accounts for only 30 percent of its capacity.
  • Stone Brewing Company, headed by fiercely independent CEO Greg Koch, admitted that it had received $90 million in private equity financing and would lend the Stone name to a hotel. It, too, is cutting jobs.
  • And homebrew supply retailer Northern Brewer has agreed to be acquired by than Anheuser-Busch InBev.
  • Notte doesn’t think these developments mean the craft beer bubble has burst. He writes:

    “If anything, it all begrudgingly recognizes that the players in all tiers of the beer industry have found themselves in the same predicament: Running a business in an environment where constant growth isn’t a given and where big decisions are often followed by unintended fallout.”

    The Friday Mash (St. John the Silent Edition)

    Today is the feast day of St. John the Silent. So, in the words of Elmer Fudd, we’re going to be “vewy quiet”.

    Shhhhh…

    We begin in San Diego, where Stone Brewing Company co-founders Greg Koch and Steve Wagner have invested $100 million in True Craft, a private-equity firm that will take minority positions in craft breweries that need funding to expand.

    Brewery Vivant and the Grand Rapids Symphony Orchestra have released a collaboration beer, Carmina Beerana. This single-malt, single-hop beer was inspired by Carl Orff’s classic work.

    Hopyard, a newly-opened beer bar in Charlottetown, Prince Edward Island, offers two of the hottest things in pop culture: craft beer and vinyl music.

    Jeff Vrabel of GQ magazine unleashed a righteous rant about alcoholic root beer. He believes that root beer belongs to childhood and ought to remain there.

    Last Friday, the Bar D’Alsace-tian in London put a team of Alsatian dogs to work delivering cold bottles of beer to customers in custom harnesses in the shape of a barrel.

    Starr Hill Brewery is celebrating the Dave Matthews Band’s 25th anniversary with a beer called Warehouse Pils. “Warehouse” is the name of the band’s official fan club.

    Finally, Danish beermaker Mikkeller Brewing is bringing its acclaimed Copenhagen Beer Celebration to Boston. The two-day festival, to be held in September, will feature more than 100 craft beers from over 50 breweries from around the world.

    The Friday Mash (Tiffany’s Edition)

    On this day in 1837, the retailer now known as Tiffany’s was founded by Charles Lewis Tiffany and Teddy Young in New York City. The founders called their store a “stationery and fancy goods emporium.” However, Tiffany’s didn’t serve breakfast, let alone Founder’s Breakfast Stout.

    And now….The Mash! 

    We begin in Sacramento, where the inaugural California Craft Beer Summit took place. This two-day festival attracted the biggest names in craft brewing, who talked about the state of the industry.

    Listen up, class. Sylvester Schneider, the owner of Zum Schneider in New York City, has prepared a video to show you how to pour wheat, pilsner, and lager beer like a German.

    A boarding school in Zimbabwe has slapped a ban on breakfast cereal. Students mixed it with brown sugar, water, and yeast, then left it in the sun to ferment into beer.

    The recipes for New Belgium Brewing Company’s dubbel and trippel Belgian-style ales are getting a makeover. The changes, which include a different yeast strain, will make the beers more authentically Belgian tasting.

    A video of six Scottish men, drinking beer at the bottom of a swimming pool while on vacation in Florida, was viewed more than 1.8 million times on YouTube in the week after it was posted.

    Greg Koch, the founder of Stone Brewing Company, is stepping down as CEO. He’ll stay on as executive chairman, and he promises not to sell out to one of the big breweries.

    Finally, even though China is a huge beer market, intense competition has made it tough for breweries to make much of a profit. That problem could get worse as the country’s economy slows.

    Does Crowdfunding Work?

    Earlier this year, Stone Brewing Company sought $2.5 in capital via the Indegogo website. Some wondered why an established brewery would turn to crowdfunding, but CEO Greg Koch answered critics by spelling out what investors in “beer futures” would receive. Stone met its goal in six weeks.

    There have been some 800 beer-related crowdfunding campaigns, and their success rate has been slightly higher than average.

    Indiegogo’s CEO has advice for breweries and other businesses that are looking for funds: be honest, communicate regularly with investors, and stay in touch even after successfully raising capital.

    The Friday Mash (B&O Railroad Edition)

    On this day in 1827, the Baltimore & Ohio Railroad was incorporated. Can you name the other railroads on the Monopoly board? Time’s up. They’re the Pennsylvania Railroad, the Reading Railroad, and the Short Line.

    All aboard!

    We begin in Brazil, where the Polar brewery has an invention that will make it easier to converse in bars. It’s a beer cooler that cuts out GSM, Wi-Fi, GPS, 3G, and 4G signals.

    California’s drought could make your Lagunitas IPA will taste different. The Russian River, which provides Lagunitas with its water, is drying up, and brewery might have to find another source.

    Beer was the headline ingredient in last Sunday’s “Chopped” competition on the Food Network. The show, with Stone Brewing Company’s Greg Koch as a judge, airs again on Sunday evening.

    Higher zymurgical education awaits in the form of Joshua Bernstein’s new book, The Complete Beer Course. It contains a series of “classes” devoted to families of beers.

    On Tuesday, when he was in Chicago to announce the award of a federal manufacturing grant, President Obama put in a plug for Goose Island Brewing Company’s “superior beer.”

    A Korean romantic comedy in which the female lead makes chimek to celebrate winter’s first snow has Chinese viewers clamoring for the dish, which is Korean for “fried chicken” and “beer.”

    Finally, a gathering of 490 Yelp members at Santa Anita Race Track might set a new Guinness record for beer tasters. We hope they bet on Ambitious Brew, who won the $100,000 Sensational Star stakes race.

    A Craft Beer Bubble?

    America has never had more breweries than it has today, and the quality of beer at your local bar has never been better. But will the good times last? Some observers think the craft-brewing industry is in the midst of a classic bubble that might be about to burst.

    Noah Davis of Business Insider points that for every Alchemist, brewers of the wildly successful Heady Topper double IPA, “there are numerous small breweries turning out solid product that will never see a profit.” Davis wonders how the hundreds of breweries that opened this year, not to mention another 1,500 in the planning stages, are going to find distributors, get shelf space, and sign up tap accounts. The newcomers, he adds, are entering a craft beer market that is dominated by a few big players.

    Industry figures believe the days of double-, and even triple-digit growth won’t last much longer. John Laffler, who opened a craft brewery in Chicago last year, said, “I see the industry becoming more local, more regional, more city-specific. At that point, you’re locked in making $35,000 a year and hopefully your business can last 10 years.”

    Some startups might not survive. According to Greg Koch, the founder of Stone Brewing Company, “You can expect that consumer fatigue will show up again, just like it did in 1996. It’s like a school of fish. It will turn, but you don’t know when.” The industry shakeout of the late 1990s resulted in some 300 brewery closures.

    The Friday Mash (Buy Low, Sell High Edition)

    On this day in 1932, the Dow Jones Industrial Average reached its lowest level of the Great Depression: 40.56, an 89-percent drop from its pre-1929 crash high. Those steep losses would have left investors crying in their beer but, unfortunately, Prohibition was still in force.

    And now…The Mash!

    We begin in Toronto, where a more recent market crash forced lawyer Dmitri van Kampen to start a new career as the founder of Spearhead Brewing Company. Its flagship beer is Hawaiian Pale Ale.

    Across the pond, a modern-day War of the Roses is brewing. Samuel Smith has gone to court to stop a local micro, the Cropton Brewery, from using Yorkshire’s iconic white rose on its beer labels.

    “May I see some ID?” Eighty-two-year-old Dale Schneck was surprised to hear that phrase from the clerk at a supermarket in Pennsylvania that has adopted a “card everyone” policy.

    A new attraction for visitors to Maine is the Maine Beer Trail. Those who visit all 25 breweries on the trail get a prize pack of Maine brewery merchandise.

    Instead of entering the ministry, Bible college graduates Mike Reinhardt and Nate Watson are starting a brewery. They’ve also started a blog called Thank Heaven for Beer.

    Mario Rubio, who brews at Brewed for Thought, updates us on Lagunitas Brewing Company’s expansion. When it’s completed, the brewery will be able to turn out 900,000 barrels a year.

    FInally, let’s raise a glass to brewery founders Greg Koch, Deborah Carey, and Rick Doyle, who were named American finalists in Ernst & Young’s Entrepreneur of the Year program.

    Selling Craft Beer

    Greg Koch, the CEO of the Stone Brewing Company, has a produced a six-minute sales pitch aimed at bar owners. Koch compares an establishment’s tap handles to real estate, and says that devoting them to craft beer puts that real estate to its best and highest use. Here’s the video:

    The Friday Mash (On the Road Edition)

    On this day in 1934, journalist Charles Kuralt was born. He’s best known for his “On the Road” series that aired on CBS radio and television (and which earned him two Peabody Awards). Kuralt’s inspiration was John Steinbeck’s Travels With Charley, which Paul read at the age of 13 and, as a result, developed a life-long fondness for travel. His love of beer came some years later.

    And now…The Mash!

    We start with something to put hair on your chest. The Atlantic Brewing Company of Bar Harbor, Maine, is about to release a Manly Man Beer Club series of beers.

    He is worthy! Last weekend, Greg Koch, the CEO of Stone Brewing Company, was enthroned in the Knighthood of the Brewers Mash Staff at a ceremony in Brussels. Also enthroned: Todd and Jason Alstrom of BeerAdvocate.com. Congratulations, gentlemen!

    All the beer you can drink plus a ballgame for $50? A flat economy and an awful season by the Cubs have forced the operators of rooftop venues outside Wrigley Field to slash their prices.

    In Indianapolis, local officials have given approval to a pub that will pour Indiana-brewed beer at the City Market. The market is partnering with the Brewers of Indiana Guild on this project.

    More evidence that “all politics is local”: Idaho senator Mike Crapo, a abstinent member of the Mormon faith, supports a tax break for small brewers. The reason? His state’s barley farmers stand to benefit, too.

    Danner Kline, the founder of Alabama’s Free the Hops!, has come up with a craft beer to pair with each opponent on the Crimson Tide’s football schedule.

    Finally, according to the Beer Bloggers Conference, there are 529 “citizen beer bloggers”–people who blog about beer, and whose blog is not designed to promote a business.

    We’re Celebrating Ludwig’s 250th Blog Post…

    …by putting the band back together!

    The band is called “The Gourdians,” and consists of Greg Koch (Stone Brewing Company), David Buhler (Elysian Brewing Company), and Marty Jones (Wynkoop Brewing Company). While in Chicago for last week’s Craft Brewers Conference, they were joined by Rick Nielsen of Chicagoland favorite Cheap Trick. Neilsen, you might remember, was an investor in the Piece Brewery.

    See–and hear–for yourself:

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